While some previous rumors stated that Microsoft would cut the price of Windows for smartphones and tablet OEMs by as much as 75 percent, the company has officially announced during its BUILD 2014 keynote address today that the price of Windows will actually be free for OEMs to put in smaller devices.

The parameters are that hardware makers who create smartphones and tablets that are smaller than 9 inches will get to install Windows Phone 8.1 or Windows 8.1 for free. That means all Windows Phone OEM makers will get the OS for zero, as will PC makers who create tablets that are similar to Dell Venue Pro 8. Tablets that are larger than 9 inches won't be eligible for the free Windows 8.1 OS.

This move by Microsoft is clearly designed to get Windows installed in more devices, similar to how Google makes Android free for use in third party smartphones and tablets. It remains to be seen if there will be any additional conditions to this deal, such as licensing Microsoft apps like Skype and Bing for use in those smaller hardware products, but this will likely be a "win-win" for both Microsoft and device makers.